In re Gen. Motors Air Conditioning Mktg.

• Decision Date: 26 October 2021
• Docket Number: Case Number: 18-md-02818
• Parties: IN RE: GENERAL MOTORS AIR CONDITIONING MARKETING AND SALES PRACTICES LITIGATION All Cases
• Court: U.S. District Court — Eastern District of Michigan

568 F.Supp.3d 837

IN RE: GENERAL MOTORS AIR CONDITIONING MARKETING AND SALES PRACTICES LITIGATION All Cases

Case Number: 18-md-02818

United States District Court, E.D. Michigan, Southern Division.

Signed October 26, 2021

ORDER DENYING DEFENDANT'S MOTION TO DISMISS (ECF No. 93)

MATTHEW F. LEITMAN, UNITED STATES DISTRICT JUDGE

In this putative consolidated class action, Plaintiffs allege that the air conditioning systems of vehicles manufactured by Defendant General Motors ("GM") are defective. In the Third Amended Consolidated Master Class Action Complaint (the "Complaint"), Plaintiffs assert several different claims against GM, including a claim under the federal Magnuson–Moss Warranty Act, 15 U.S.C. § 2301 et seq. (the "MMWA" or the "Act"), on behalf of a nationwide class (Count I), a breach of express warranty claim on behalf of a nationwide class (Count III), and several state-law claims on behalf of state-specific sub-classes. (See Compl., ECF No. 91.)

On December 16, 2020, GM moved to dismiss Plaintiffs’ express warranty claims and to strike Plaintiffs’ nationwide class allegations underlying their MMWA and warranty claims. (See Mot., ECF No. 93.) The Court held a video hearing on the motion on May 18, 2021. For the reasons explained below, the motion is DENIED .

I

The Court previously described the factual background of this dispute in its Opinion and Order granting in part and denying in part GM's motion to dismiss Plaintiffs’ First Amended Consolidated Master Class Action Complaint. (See Op. and Order, ECF No. 60.) The Court incorporates and will not repeat that background here. Facts relevant to the issues currently before the Court are included in the discussion below.

II

GM first argues that the Court should dismiss Plaintiffs’ claims that GM breached the express limited warranty included with each class vehicle. (See Mot., ECF No. 93, PageID.4505-4507.) In relevant part, that warranty provides as follows:

The warranty covers repairs to correct any vehicle defect, not slight noise, vibrations, or other normal characteristics of the vehicle related to materials or workmanship.

(Warranty, ECF No. 35-2, PageID.1755.) GM says that this warranty "limits coverage" to defects related to "materials or workmanship" and does not cover design defects. (Mot., ECF No. 93, PageID.4505.) And GM asserts that here, Plaintiffs have alleged only a design defect. (See id. ) Thus, GM insists that Plaintiffs’ express warranty claims are not viable "because the alleged air conditioning design defect is not covered by [the w]arranty." (Id. , PageID.4054.) The Court disagrees.

The Court concludes that GM's reading of the warranty is not the only plausible one. Indeed, it would not necessarily be unreasonable to conclude that the warranty could apply to design defects. That conclusion is supported by the rulings of two other Judges on this Court who recently reviewed the same warranty that is at issue here. First, in McKee v. General Motors , 376 F.Supp.3d 751 (E.D. Mich. 2019) another Judge of this court rejected GM's argument that "the [w]arranty [ ] cover[ed] only vehicle defects related to materials or workmanship—i.e. only manufacturing defects." Id. at 757. The court explained:

GM's argument is inconsistent with the Warranty's plain language. GM argues that the Warranty covers only "defects in ‘material or workmanship.’ " See, e.g. , ECF 23, PgID 403; ECF 30, PgID 537 ("The warranty provides for the repair of ‘any vehicle defect ... due to materials or workmanship occurring during the warranty period.’ "). GM further represents that the warranty excludes "slight noise, vibrations, or other normal characteristics of the vehicle." ECF 30, PgID 537.

But in its entirety, the relevant Warranty language states that it "covers repairs to correct any vehicle defect, not slight noise, vibrations, or other normal characteristics of the vehicle related to materials or workmanship." ECF 23-2, PgID 433. GM's preferred reading inserts a comma into the Warranty. But the Warranty does not contain GM's proffered comma. Rather, the Warranty's plain language demonstrates that the phrase "related to materials or workmanship" modifies "normal characteristics of the vehicle" and not "any vehicle defect." The Warranty therefore covers "any vehicle defect" except for slight noise, vibrations, or manufacturing defects related to "normal characteristics of the vehicle."

GM maintains that the Court's interpretation creates an absurdity because the Warranty's next sentence provides that "[n]eeded repairs will be performed using new, remanufactured, or refurbished parts" and replacement parts could not remedy a design defect. ECF 23-2, PgID 433. But the Warranty's language covers both design defects and abnormal "characteristics of the vehicle related to materials or workmanship." Id. replacement parts would satisfactorily remedy abnormal characteristics of the vehicle. Moreover, new parts (e.g. a newly-designed transmission) could replace parts with design defects. Thus, no absurdity results from the Court's construction of the Warranty's plain language.

Id. at 757-58 (internal footnotes omitted). The court in McKee further distinguished and found unpersuasive several of the authorities that GM relied upon for its interpretation of the warranty language, including some of the same cases that GM also relies upon here (i.e. , Sloan v. General Motors , 2017 WL 3283998 (N.D. Cal. Aug. 1, 2017) and Acedo v. DMAX, Inc. , 2015 WL 12696176 (C.D. Cal. Nov. 13, 2015) ). See id. at 758-59. Then, in 2020, a second Judge of this Court reviewed this same warranty and agreed that the court's reading of the warranty in McKee was "a plausible view of the warranty language." Francis v. General Motors, LLC , 504 F.Supp.3d 659, 673 (E.D. Mich. 2020) (declining to dismiss breach of express warranty claim and holding that "the issue need not be resolved at the pleading stage of this case" because resolution "must await development of the record").

This Court agrees that it is plausible to read the warranty as covering design defects. And Plaintiffs’ allegations in the Complaint incorporate a design defect claim. (See , e.g. , Compl. at ¶¶ 233-235, 355, 480, 613, ECF No. 91, PageID.3978, 4050, 4080, 4107.) Therefore, for all of these reasons, the Court declines to dismiss Plaintiffs’ express warranty claims.

III

A

The Court next turns to GM's argument that the Court should strike Plaintiffs’ nationwide class allegations under the MMWA. (See Mot., ECF No. 93, PageID.4508.) The MMWA is an "unusual" statute because it permits consumers to "sue on state-law warranty claims in federal court, regardless of whether or not the parties are of diverse citizenship." Gardynski-Leschuck v. Ford Motor Co. , 142 F.3d 955, 956 (7th Cir. 1998). Here, the eighteen named Plaintiffs allege that GM violated the MMWA when it breached its express and implied warranties under state law. (See Compl. at ¶¶ 345-368, ECF No. 91, PageID.4048-4045.) Plaintiffs bring their MMWA claim "on behalf of members of the Nationwide Class who are residents of all fifty states and Washington D.C." (Id. at ¶ 346, PageID.4048.)

Two provisions of the MMWA are relevant to GM's motion to strike Plaintiffs’ class allegations. The first is section 310(d)(1) of the Act, 15 U.S.C. § 2310(d)(1). It provides as follows:

(1) [...] a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief --

(A) in any court of competent jurisdiction in any State or the District of Columbia; or

(B) in an appropriate district court of the United States, subject to paragraph (3) of this subsection.

15 U.S.C. §§ 2310(d)(1)(A)-(B). This section does two things that bear on the issue before the Court. It first "creates" a "cause of action." In re Anheuser-Busch Beer Labeling Mktg. & Sales Pracs. Litig. , 644 F. App'x 515, 516 (6th Cir. 2016). It then "provides for federal jurisdiction" over that cause of action. Harnden v. Jayco, Inc. , 496 F.3d 579, 581 (6th Cir. 2007) (citing 15 § U.S.C. 2310(d)(1)(B)). See also Golden v. Gorno Bros. , 410 F.3d 879, 881 (6th Cir. 2005) (same).

The second relevant section is section 310(d)(3) of the Act, 15 U.S.C. § 2310(d)(3). This section circumscribes the subject-matter jurisdiction conferred by section 310(d)(1)(b) by making that jurisdiction "subject to" certain "requirement[s]." Harnden , 496 F.3d at 581. More specifically, section 310(d)(3) sets minimum jurisdictional thresholds for MMWA claims brought in federal court pursuant to section 310(d)(1)(B) (the "Jurisdictional Thresholds"):

(3) No claim shall be cognizable in a suit brought under paragraph (1)(B) of this subsection –

(A) if the amount in controversy of any individual claim is less than the sum or value of $25;

(B) if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or

(C) if the action is brought as a class action, and the number of named plaintiffs is less than one hundred.

15 U.S.C. §§ 2310(d)(3)(A)-(C).¹

GM argues that Plaintiffs’ MMWA class allegations are insufficient as a matter of law because they do not satisfy the requirement in subsection 310(d)(3)(C), 15 U.S.C. § 2310(d)(3)(C), that an MMWA federal class action must have at least 100 named plaintiffs (the "Class Action Jurisdictional Threshold"). (See Mot., ECF No. 93, PageID.4508, citing 15 U.S.C. § 2310(d)(3)(C).) Plaintiffs respond that this Court has jurisdiction to hear their MMWA class claim despite the lack of 100 named plaintiffs because the Court has subject-matter jurisdiction over the claim under the Class Action Fairness Act, 28 U.S.C. § 1332(d) ("CAFA"). Plaintiffs insist that CAFA provides a viable, independent basis for subject-matter jurisdiction over...